“Across the health services sector, there is a move towards offering more integrated care, especially for patients who have multiple long term conditions and need care
from many providers across different care settings. The launch of the ‘Five Year Forward View’1 and the Integrated Personal Commissioning (IPC) programme have added impetus to this trend. However, sector feedback indicates that the current forms of payment does not always support the delivery of more person centred co-ordinated care.

Monitor and NHS England are committed to using the full potential of the payment system to provide better support across the country for innovations in patient centred, co-ordinated care. To enable such innovation, the Health and Social Care Act 2012 provides for payment arrangements to be determined locally rather than nationally,
2 where this will benefit patients.

Capitated payments are one such payment arrangement that several local care economies are developing. Broadly speaking, capitated payment or capitation means paying a provider or group of providers to cover the majority (or all) of the care provided to a target population, such as patients with multiple long term conditions (LTCs), across different care settings. The regular payments are calculated as a lump sum per patient. If a provider meets the specified needs of the target population for less than the capitated payment, they will generate a financial gain to the local health system. Allowing providers to share in any such gain gives them an added incentive to keep patients in their target population healthy. They are more likely to identify risks, intervene early and arrange the right treatment for patients, at the right place and the right time to aid patients’ recovery, continued wellness and better management of long term conditions.”